Core Insights - Investors in U.S. junk bonds are becoming increasingly cautious, with CCC-rated bonds index falling nearly 0.8% over the past month, underperforming the broader high-yield market [1][2] - Distressed U.S. dollar loans reached $71.8 billion at the end of October, marking the highest level since April [2] - Credit spreads between investment-grade and junk bonds have widened, indicating a preference for safer debt among investors [3] Market Performance - The State Street SPDR Bloomberg High Yield Bond ETF (JNK) gained about 0.4% in the past month and approximately 1% year-to-date as of November 7, 2025 [2] - Notable junk bond ETFs include: - First Trust Senior Loan Fund (FTSL): Up 0.4% past month, down 0.7% YTD, yields 7.29% annually [4] - iShares High Yield Corporate Bond BuyWrite Strategy ETF (HYGW): Up 0.6% past month, down 5.4% YTD, yields 12.89% annually [4] - First Trust Tactical High Yield ETF (HYLS): Up 0.4% past month, up 1.1% YTD, yields 6.89% annually [4] - iShares Interest Rate Hedged High Yield Bond ETF (HYGH): Up 0.7% past month, down 0.3% YTD, yields 7.03% annually [4] - Invesco Senior Loan ETF (BKLN): Up 0.8% past month, down 0.6% YTD, yields 7.11% annually [4] Future Outlook - Despite recent weaknesses, the junk bond market is not on the verge of collapse, with spreads remaining below their 2025 average [5] - The Federal Reserve's rate cuts initiated in September may lead to lower bond yields and higher treasury bond prices, potentially diminishing the appeal of high-yield bonds [6] - Investors willing to take risks may consider junk bond ETFs for substantial current income, while investment-grade corporate bond ETFs like iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) have gained about 3.7% this year, yielding 4.39% annually [7]